Pyoderma gangrenosum (PG) is a rare, ulcerative skin disorder of unknown etiology which has been reported to respond to treatment with thalidomide. The pathogenesis of PG is not known. The mechanism of action of thalidomide in this situation is also unknown. We have recently demonstrated that in vitro, thalidomide acts as a costimulator of T cells, increasing the secretion of Th-1 type cytokines. Our studies in patients with HIV infection and sarcoidosis have shown that soluble markers of T-cell activation, as well as plasma levels of interleukin-12, are consistently increased following thalidomide therapy. We hypothesize that thalidomide causes the healing of PG skin ulcers primarily by stimulating Th-1 T cells and promoting regulatory interactions between various cellular components of the immune system. Here we propose an open-label pilot study of thalidomide therapy for moderate-to-severe PG, in which we shall correlate clinical responses to therapy with peripheral blood markers of immune activation and function, as well as immunohistochemical analyses of perilesional cellular infiltrates. The identification of consistent immune correlates of clinical response will provide insights into the mechanism of action of thalidomide in this clinical setting, and more fundamentally, may shed light on the nature of the immune dysregulation which underlies the pathogenesis of PG.